Gold Prices Decline After Fed Decision – Decline Likely to Continue

December 19, 2016

Gold investors waited for the ball to drop when the Feds were meeting to determine if the interest rate in the United States would go up. The inevitable happened. The interest rate was raised. Gold prices promptly responded by heading south. This has many investors asking where gold is going from here.

The Uncertainty

One thing is certain right now – the future of gold is uncertain. There are many factors that point to the price of gold continuing to slide into the new year. The decrease in unemployment in the United States and the strength of the U.S. dollar are two of these factors.

Some predictions have gold prices starting to trend upward in 2017. These optimists are basing this information largely on the belief that there will be some economic troubles that occur after January 1. The pessimists are noting that world events, particularly those in the United States, are likely going to have a negative effect on gold prices for a long time to come.

Things to Watch

One thing that is going to make a big impact on gold prices is how the Trump presidency begins. The election of Donald Trump in the United States came as a shock to many. This sent gold prices into a downward spiral.

When Donald Trump is sworn into office in January, investors will once again find that they are waiting with baited breath to see what happens. Many hope that once President-elect Trump takes office and things settle again, the price of gold will begin to rally. Some expect that the new president’s stimulus package and his 100-day plan will help gold prices.

The Fed is likely going to raise interest rates again 2017. The number of times the interest rate is raised is expected to be at least twice, but possibly three times. Having to cope with three interest rate increases in the U.S. might send gold prices down more than what some investors are prepared to deal with.

Investors Are Cautious

People who are currently involved in gold trading are treading very lightly right now. The market is bearish and it has been this way for the past five years. This signals that it is due for a change, but whether it will become a bullish market in 2017 is up in the air. The uncertainty makes it difficult for new investors to determine whether now is the time to buy. It all comes down to personal goals and your trading strategy.

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